Has the Sahm Rule been triggered?

Bloomberg reported that the Sahm Rule has been triggered last Friday. In fact, the recent 3-month average rose to 4.0%, which is 50 bps above the 3-month average low of the past 12 months. For more on the Sahm Rule, check this post by Adam.

The St. Louis FRED database though, shows that the Sahm Rule hasn’t been triggered yet as it stands at 0.43 bps because they count down to the decimal place.

The unemployment rate had to rise to 4.29% in June to trigger the Sahm Rule. Instead, it was 4.054%. The tricky part here is that almost all of the pickup in the unemployment rate in the first half of 2024 has been due to new entrants and re-entrants rather than more layoffs as it happened in the past recessions. For more you can read here.

This is just another thing making this cycle more complicated than it already is 🙂